Latest news with #U.S.GlobalJetsETF
Yahoo
05-05-2025
- Business
- Yahoo
Airline Stocks Rally as Oil Drop Eases Jet Fuel Pressure
Airline shares outperformed on Monday, with several names ranking among the top gainers on the S&P 500, as investors bet on lower fuel costs following a fresh slide in oil prices. Delta Air Lines (NYSE:DAL) rose nearly 3%, while United Airlines (NASDAQ:UAL) gained 2.8%, bucking broader market weakness. The U.S. Global Jets ETF (JETS) advanced about 1.4% as oil prices pulled back amid news that OPEC+ will ramp up output by 411,000 barrels per day in June, on top of prior increases in April and May. Warning! GuruFocus has detected 3 Warning Sign with DAL. The prospect of a supply-driven surplus has sparked hopes of lower jet fuel costs, a key expense for airlines. Analysts say the benefits may vary across carriers depending on their hedging strategies, though overall cost relief could support margins and ticket pricing flexibility. American Airlines (AAL) jumped 3.3%, while Alaska Air Group (ALK) climbed 3.8%. Frontier Group (ULCC) led gains with a 6.7% rally. Other movers included Southwest Airlines (NYSE:LUV) up 1.2%, JetBlue Airways (NASDAQ:JBLU) down 0.4%, and Allegiant Travel (NASDAQ:ALGT) up 1.6%. European names like Ryanair (NASDAQ:RYAAY), Lufthansa (DLAKF), IAG (ICAGY), and EasyJet (EJTTF) also traded higher during afternoon sessions. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
05-05-2025
- Business
- Yahoo
Oil Slumps to Below $60: ETFs to Gain
Oil prices have been going through tough times. After logging the biggest monthly loss since 2021, oil prices tumbled below $60 per barrel for the first time since February 2021. The benchmark Brent crude dropped to $58.50 per barrel in early trading today while West Texas Intermediate (WTI) slipped to $55.53. The decline is attributed to a combination of factors, including the decision to increase production by the Organization of the Petroleum Exporting Countries (OPEC), weakening demand and increasing U.S. production (read: Oil's Worst Month Since 2021: Will Energy ETFs Rebound?). OPEC and its allies, led by Saudi Arabia and Russia, agreed to accelerate production for the second straight month. The agency is expected to increase output in June by 411,000 barrels per day. The rise is nearly three times the volume that was initially signaled by OPEC. Recent economic data from major economies, particularly China, suggest cooling industrial activity and weaker-than-expected energy consumption. China's April manufacturing PMI fell back into contraction to 49.0, marking a 16-month low. Further, President Donald Trump's tariffs have raised fears of a recession that will slow demand at the same time that OPEC+ is quickly increasing U.S. shale producers have ramped up output significantly. Per the U.S. Energy Information Administration (EIA), U.S. oil production is expected to peak at 14 million barrels per day in 2027. While a slump in prices is hurting oil exporting and production companies, it has been a blessing for a few zones, including airlines, retail, consumer discretionary, oil importers and refiners. We have highlighted some ETFs that are expected to benefit from lower oil prices: U.S. Global Jets ETF (JETS) Airlines are the biggest beneficiaries of lower oil prices as fuel accounts for a major portion of their operating expenses. As such, lower oil price will likely boost their profitability, propelling JETS higher. U.S. Global Jets ETF provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. The product has gathered $757.1 million in its asset base while charging investors 60 bps in annual fees. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: Travel Slump Hits Airlines: Should You Buy the Dip With ETF?). VanEck Oil Refiners ETF (CRAK)Oil refiners are the only bright spot in the energy space amid declining oil price. This is because players in this industry use oil as an input for processing refined petroleum products. Hence, lower oil prices could result in higher margins for refiners. With AUM of $23.7 million, VanEck Oil Refiners ETF is a one-stop shop for investors to play the oil refining market. It follows the MVIS Global Oil Refiners Index, charging 62 bps in annual S&P Retail ETF (XRT)Lower oil prices also bode well for the retail sector. SPDR S&P Retail ETF tracks the S&P Retail Select Industry Index, which provides exposure across large, mid and small-cap stocks. It charges 35 bps in annual fees and has AUM of $120.2 million. XRT has a Zacks ETF Rank #3 (Hold) with a Medium risk Discretionary Select Sector SPDR Fund (XLY)Lower oil price leads to higher consumer spending, which accounts for more than two-thirds of U.S. economic activity. The consumer discretionary sector will thus see a spike. Consumer Discretionary Select Sector SPDR Fund offers exposure to consumer discretionary stocks by tracking the Consumer Discretionary Select Sector Index. It is the largest and the most popular product in this space with AUM of $19.2 billion and charges 0.0.08% in expense ratio. The product has a Zacks ETF Rank #3 with a Medium risk MSCI India ETF (INDA)Lower oil prices are benefiting India the most as it is the world's third-largest importer of crude oil, accounting for two-thirds of crude oil requirements. INDA, the ultra-popular ETF with AUM of $9.1 billion, offers exposure to large and mid-cap companies by tracking the MSCI India Index. It charges 62 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook (read: India ETFs Bounce Back: Here's Why). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SPDR S&P Retail ETF (XRT): ETF Research Reports Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports iShares MSCI India ETF (INDA): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports VanEck Oil Refiners ETF (CRAK): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research
Forbes
15-04-2025
- Business
- Forbes
Here's What You Missed As The S&P 500 Nudged Higher Yesterday
TOPSHOT - This photo taken on March 28, 2019 shows planes from various airlines in storage at a ... More 'Boneyard' facility beside the Southern California Logistics Airport in Victorville, California. (Photo by Mark RALSTON / AFP) (Photo credit should read MARK RALSTON/AFP via Getty Images) The S&P 500 gained nearly 1% yesterday, April 14, 2025, extending a relief rally that lifted most sectors across the board — tech, industrials, consumer, you name it. Market sentiment was broadly positive. But if you were watching closely, there was one glaring exception: Airlines. The U.S. Global Jets ETF (JETS) - which tracks major airline stocks - fell 1.15% while the rest of the market climbed. And this isn't a one-day blip. It's a symptom of a much deeper, concerning trend that many investors may have overlooked. Airlines Are in a Tailspin The JETS ETF has been plummeting all year. The top holdings of the ETF - Southwest (NYSE:LUV), Delta (NYSE:DAL), American (NASDAQ:AAL), and United Airlines (NASDAQ:UAL) - make up over 40% of the fund. And they've tanked heavily this year. The figures below are YTD returns: This isn't sector rotation. This is a sector collapse. And the numbers behind it are as concerning as the charts. Strong Headwinds Are Hurting Growth Historically, airlines have been volatile, but they at least had growth to show for it post-COVID. Over the past 3 years, revenue growth for these carriers ranged from 22-36% annually. But here is the shock: In the last 12 months that momentum evaporated and these airlines grew between 3-6% That's a dramatic slowdown. And without pricing power, it's hard to imagine growth reaccelerating meaningfully from here - especially as economic conditions tighten and consumer discretionary spending cools. And the Debt Load? Things Don't Look Good Take American Airlines for example - with a staggering Debt-to-Equity ratio of 5.4x, a thin operating margin of 5.9%, and a free cash flow margin of merely 2.4% - how exactly does a company with those economics plan to pay down a huge debt load? Southwest isn't faring much better. Once considered a fiscally sound airline, it is now barely breaking even on operating margin, with persistent pressure on both fuel and labor costs. The result: investors are not interested at all. You shouldn't be either. These airline stocks are trading at PE multiples of <10 and PS multiples of <0.5. This is not deep value - this is the market pricing in huge risk. We exclude stocks that price in such huge risks in the Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics
Forbes
09-04-2025
- Business
- Forbes
Delta Vs. American Airlines: The Clear Winner For Turbulent Times
By DM Martins' Research There is little that I can say to investors in the airline space to ease their anxiety over the current market environment. Airline stocks tend to be highly sensitive to the business cycles, as evidenced by the U.S. Global Jets ETF (JETS) having already corrected 20% from the January 52-week high in the face of serious concerns over an imminent recession. To be clear, I currently believe that now is not the best time to invest in airline stocks. Having said so, I can always be wrong, and maybe the bottom is not about to fall off. Equally importantly, it may still be helpful to explore the question: If I were to invest in a US-based airline in hopes of an eventual rebound, or maybe to set up a long-short trade, which would be my chosen winner? Today, I face off two of the largest carriers in the country, Delta Air Lines and American Airlines. Who might be the best buy relative to its peer? I will present below three reasons why I believe that Delta has an edge over its Fort Worth, Texas-based competitor. Better operationally Delta has been operationally superior to American for some time. To be clear, there are a few ways that one can define the term 'operationally superior', including by looking at things like on-time departures. In this regard, Delta ranked the highest in North America and third globally in 2024, at a rate of 84%, while American at 79% did not make the top 10 list worldwide. The higher ranking speaks to Delta's ability to deliver on customer service, which could be a positive for consumer loyalty and, ultimately, the stock as well. But I like to look at one metric that I believe best reflects how efficient an airline is at operating vis-a-vis its ability to charge its customers for the services that the airline provides: per-unit margin, excluding fuel costs and other non-core expenses. One unit, in this case, is ASM, or available seat mile. Even before COVID-19, Delta's per-unit margin ex-items stood out at 55% vs. American's meager 28%. To be fair to the latter, American managed to defend its profitability a little better through the pandemic, as the chart below shows. Delta versus American PRASM Chart Having substantially higher operating margins means first that Delta is noticeably more competent at operating, keeping costs down relative to its passenger revenues. In my view, this is a combination of a better established hub-and-spoke network in the US and a better competitive position in the profitable premium and international businesses. Second, higher per-unit op margins also means that Delta's bottom line is better protected. That is: when revenues (the top line) fluctuate, all other things held equal, Delta's earnings should not swing as widely as American's due to lower operating leverage. It helps to explain why, since the start of 2020, Delta's quarterly non-GAAP EPS has ranged from -$4.43 to $2.68, while American's EPS has dipped as low as -$7.82. Higher-quality balance sheet The second pillar that supports my bullish views on Delta compared to American is balance sheet robustness. Here, debt and equivalents (I like to include debt-like items, such as leases and pension obligations, and exclude cash in my analysis) matter most to me. The more financially leveraged a company is, the more exposed it becomes to a deterioration in the business environment. Delta's net debt and equivalents represent 30% of its total assets. This is not too bad for a US-based airline, certainly one of the so-called legacy ones. By comparison, American's debt ratio is much higher, at nearly 52% (see chart below). Delta versus American Net Debt to Asset Chart While American's bloated balance sheet is partly explained by the company's investment in its younger aircraft fleet (Delta operates 62 airplanes aged 30 years or more, while American does not), heading into a period of economic deceleration with a heavier debt load does not appeal to me as a potential investor. Attractive valuation, with a catch On the surface, American Airlines beats Delta Air Lines in one key aspect: its stock is cheaper. The chart below shows that American stock trades at a very low 2025 P/E of 5.2x. This is nearly one turn lower than Delta's 6.1x. Compare these figures to American's 7.6x and Delta's 8.3x multiples as recently as three months ago, before the start of the current stock market unwind. Delta versus American PE Ratio Chart But there is a catch. These ratios assume stable 2025 EPS consensus expectations. Should the economy hit a soft patch, driven mostly my the global trade wars but also by the potential impact of US federal spending cuts on employment, I expect American's EPS estimates to drop more pronouncedly than Delta's, which could make its stock's valuation look less appealing. Therefore, I prefer to pay what seems to be slightly more to own Delta today (still a low P/E, mind you), understanding that the company is likely to weather a turbulent period better than American Airlines. One final word on ownership Sometimes, it helps individual investors to see what some of the renowned money managers think about particular stocks. In that regard, DAL also seems to be a favorite among famous value investors relative to AAL. Currently, Stan Druckenmiller's Duquesne Family Office owns shares of the Atlanta-based airline. The position does not crack the fund's list of top 5 holdings, but the acquisition of 818,000 shares in Q4 of last year was the fund's largest in over a decade. That said, another investment guru has thrown in the towel on the airline business altogether. Shortly after the start of the COVID-19 crisis, Warren Buffett sold all of Berkshire Hathaway's airline stocks. He is famous, among many other things, for having said that "the secret to becoming a millionaire is to start off as a billionaire and buy an airline."
Yahoo
06-04-2025
- Business
- Yahoo
Delta Air Lines Vs. American Airlines: The Clear Winner For Turbulent Times
There is little that I can say to investors in the airline space to ease their anxiety over the current market environment. Airline stocks tend to be highly sensitive to the business cycles, as evidenced by the U.S. Global Jets ETF (JETS) having already corrected 20% from the January 52-week high in the face of serious concerns over an imminent recession. To be clear, I currently believe that now is not the best time to invest in airline stocks. Having said so, I can always be wrong, and maybe the bottom is not about to fall off. Equally importantly, it may still be helpful to explore the question: If I were to invest in a US-based airline in hopes of an eventual rebound, or maybe to set up a long-short trade, which would be my chosen winner? Warning! GuruFocus has detected 4 Warning Sign with DAL. Today, I face off two of the largest carriers in the country, Delta Air Lines (NYSE:DAL) and American Airlines (NASDAQ:AAL). Who might be the best buy relative to its peer? I will present below three reasons why I believe that Delta has an edge over its Fort Worth, Texas-based competitor. Delta has been operationally superior to American for some time. To be clear, there are a few ways that one can define the term operationally superior, including by looking at things like on-time departures. In this regard, Delta ranked the highest in North America and third globally in 2024, at a rate of 84%, while American at 79% did not make the top 10 list worldwide. The higher ranking speaks to Delta's ability to deliver on customer service, which could be a positive for consumer loyalty and, ultimately, the stock as well. But I like to look at one metric that I believe best reflects how efficient an airline is at operating vis-a-vis its ability to charge its customers for the services that the airline provides: per-unit margin, excluding fuel costs and other non-core expenses. One unit, in this case, is ASM, or available seat mile. Even before COVID-19, Delta's per-unit margin ex-items stood out at 55% vs. American's meager 28%. To be fair to the latter, American managed to defend its profitability a little better through the pandemic, as the chart below shows. Having substantially higher operating margins means first that Delta is noticeably more competent at operating, keeping costs down relative to its passenger revenues. In my view, this is a combination of a better established hub-and-spoke network in the US and a better competitive position in the profitable premium and international businesses. Second, higher per-unit op margins also means that Delta's bottom line is better protected. That is: when revenues (the top line) fluctuate, all other things held equal, Delta's earnings should not swing as widely as American's due to lower operating leverage. It helps to explain why, since the start of 2020, Delta's quarterly non-GAAP EPS has ranged from -$4.43 to $2.68, while American's EPS has dipped as low as -$7.82. The second pillar that supports my bullish views on Delta compared to American is balance sheet robustness. Here, debt and equivalents (I like to include debt-like items, such as leases and pension obligations, and exclude cash in my analysis) matter most to me. The more financially leveraged a company is, the more exposed it becomes to a deterioration in the business environment. Delta's net debt and equivalents represent 30% of its total assets. This is not too bad for a US-based airline, certainly one of the so-called legacy ones. By comparison, American's debt ratio is much higher, at nearly 52% (see chart below). While American's bloated balance sheet is partly explained by the company's investment in its younger aircraft fleet (Delta operates 62 airplanes aged 30 years or more, while American does not), heading into a period of economic deceleration with a heavier debt load does not appeal to me as a potential investor. On the surface, American Airlines beats Delta Air Lines in one key aspect: its stock is cheaper. The chart below shows that American stock trades at a very low 2025 P/E of 5.2x. This is nearly one turn lower than Delta's 6.1x. Compare these figures to American's 7.6x and Delta's 8.3x multiples as recently as three months ago, before the start of the current stock market unwind. But there is a catch. These ratios assume stable 2025 EPS consensus expectations. Should the economy hit a soft patch, driven mostly my the global trade wars but also by the potential impact of US federal spending cuts on employment, I expect American's EPS estimates to drop more pronouncedly than Delta's, which could make its stock's valuation look less appealing. Therefore, I prefer to pay what seems to be slightly more to own Delta today (still a low P/E, mind you), understanding that the company is likely to weather a turbulent period better than American Airlines. Sometimes, it helps individual investors to see what some of the renowned money managers think about particular stocks. In that regard, DAL also seems to be a favorite among famous value investors relative to AAL. Currently, Stan Druckenmiller's Duquesne Family Office owns shares of the Atlanta-based airline. The position does not crack the fund's list of top 5 holdings, but the acquisition of 818,000 shares in Q4 of last year was the fund's largest in over a decade. That said, another investment guru has thrown in the towel on the airline business altogether. Shortly after the start of the COVID-19 crisis, Warren Buffett (Trades, Portfolio) sold all of Berkshire Hathaway's airline stocks. He is famous, among many other things, for having said that "the secret to becoming a millionaire is to start off as a billionaire and buy an airline." This article first appeared on GuruFocus.
